A project will produce operating cash ﬂows of €45,000 a year for four years.During the life of the project, inventory will be lowered by €30,000 and trade receivables will increase by €15,000.Trade
Payables will decrease by €10,000.The project requires the purchase of equipment at an initial cost
Of €120,000.The equipment will be depreciated straight-line to a zero book value over the life of
The project.The equipment will be salvaged at the end of the project creating a €25,000 after-tax
Cash ﬂow.At the end of the project, net working capital will return to its normal level.What is the net
Present value of this project given a required return of 14%?

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The Answer of A project will produce operating cash ﬂows of €45,000 a year for four years.During the life of the project, inventory will be lowered by €30,000 and trade receivables will increase by €15,000.Trade
Payables will decrease by €10,000.The project requires the purchase of equipment at an initial cost
Of €120,000.The equipment will be depreciated straight-line to a zero book value over the life of
The project.The equipment will be salvaged at the end of the project creating a €25,000 after-tax
Cash ﬂow.At the end of the project, net working capital will return to its normal level.What is the net
Present value of this project given a required return of 14%?

A Project Will Produce Operating Cash ﬂOws of €45,000 a Year